Answer:
Questions 1 6 are answered in your primary federal regulatory agency's regulation on SAR filing. The seminar manual contains citations to each, so you will readily be able to locate yours. For the sake of discussion, the following is taken from the FDIC's regulation which is also included in the manual:
12 CFR 353.3(g) Confidentiality of suspicious activity reports. Suspicious activity reports are confidential. Any bank subpoenaed or otherwise requested to disclose a suspicious activity report or the information contained in a suspicious activity report shall decline to produce the suspicious activity report or to provide any information that would disclose that a suspicious activity report has been prepared or filed citing this part, applicable law (e.g., 31 U.S.C. 5318(g)), or both, and notify the appropriate FDIC regional office (Division of Supervision).
From the SAR Activity Review (August, 2000, page 28): The prohibition against disclosure can raise special issues when SAR records are sought by subpoena or court order. The SAR regulations direct organizations facing those issues to contact their primary supervisor, as well as FinCEN, to obtain guidance and direction on how to proceed. In several matters to date, government agencies have intervened to ensure that the protection for filing organizations and the integrity of the data contained within the SAR database remain intact.
From the SAR Activity Review Issue 2 (June 2001, page 36): As set forth in the October 2000 SAR Activity Review (Section 5 Disclosure of SARs and Underlying Suspicious Activity), federal law (31 U.S.C. 5318(g)(2))prohibits the notification to any person that is involved in the activity being reported on a SAR that the activity has been reported. This prohibition extends to disclosures that could indirectly result in the notification to the subject of a SAR that a SAR has been filed, effectively precluding the disclosure of a SAR or even its existence to any persons other than appropriate law enforcement and supervisory agency or agencies. Selfregulatory organizations such as the New York Stock Exchange and the National Association of Securities Dealers are not appropriate supervisory agencies under current law for purposes of SAR disclosure by financial institutions. This prohibition does not preclude, under federal law, a disclosure in an appropriate manner of the facts that are the basis of the SAR, so long as the disclosure is not made in a way that indicates or implies that a SAR has been filed or that information is included on a filed SAR.
In the rare instance when suspicious activity is related to an individual in theorganization, such as the president or one of the members of the board of directors, the established policy that would require notification of a SAR filing to such an individual should not be followed. Deviations to established policies and procedures so as to avoid notification of a SAR filing to a subject of the SAR should be documented and appropriate uninvolved senior organizational personnel should be so advised.
The prohibition on notification of a SAR filing can raise special issues when SARfilings are sought by subpoena or court order. The SAR regulations direct organizationsfacing these issues to contact their primary supervisor, as well as FinCEN, to obtain guidance and direction on how to proceed. In several matters to date, government agencies have intervened to ensure that the protection for filing organizations and the integrity of the data contained within the SAR database remain intact.
From Ken: In short, your bank has no right to acknowledge filing a SAR in any type of civil, criminal, or grand jury proceeding. Banks are not subject to FOIA requests. If you are asked to indicate whether a SAR was filed, you are expected to refuse,notify your regulatory agency, and ask for assistance in fortifying your legal position. (A similar prohibition and process exists when banks are asked to provide copies of their examination reports in court proceedings. It works.) Obviously, you could testify to the illegal activity on which the SAR filing was based without mentioning the SAR.
As for Question 7, the disclosure prohibitions were enhanced by the USA Patriot Act (see page 12 in the seminar manual). No government official at any level can notify any person involved in the transaction that a report was filed on the transaction "...other than as necessary to fulfill the official duties of such officer or employee." That is not a flat prohibition, but it clearly subjects any government official to oversight if such a disclosure is made.
Finally, question 8: You will note there is no specific protection against contempt of court charges. However, it is likely that the issue will come up well before trial and your attorney will resolve it during the deposition phase. (As an academic observation, given the choice between violating a federal regulation and being charged with contempt, I would quickly choose the latter. Doing otherwise would open an incredible can of worms for my employer while simultaneously terminating my career.)
First published on BankersOnline.com 7/15/02
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